In an earlier blog, we discussed the importance of using written contracts to document business transactions. As you exchange contract drafts electronically during your negotiations with an opposing party, you should be wary of hidden metadata in your draft that might reveal sensitive information to the other side. That information could include things like the names of other companies you previously negotiated the same contract with or your negotiation strategies or positions on important deal points.

Many businesses understand the implications of metadata. Certainly any business that has been in litigation where metadata has been relevant is well aware of the risks. But in a world where fast action is important, the detail of potential metadata presence is often overlooked and the steps to remove that metadata are not taken. So we think a metadata reminder is important.

“Metadata” is data about data and describes how, when and who collected a particular set of information. In the case of an electronically-generated document, metadata is not always visible on the face of the document but it still exists and it can be the source of sensitive information. This embedded metadata is transmitted within the document when it is sent to the other side, by email for example, unless it is removed or “scrubbed.” The hidden metadata includes somewhat innocuous information like the date of its creation. But it also includes a cache of potentially sensitive information like the document creator, the number of document versions, the identities of the people who worked on the document, and draft revisions and comments.

In today’s digital age, businesses rely heavily on software programs to create, edit and compare documents that are then exchanged electronically with the other side during rounds of contract negotiation. “Track Changes” and “Insert Comments” are two regularly-used software tools. When enabled, these features store every change and comment inserted in a Word document. Depending on the viewing option that is selected within the tool, a drafter may make changes or comments that are being tracked without even knowing it. With a couple clicks of the mouse, an email recipient of that document may easily view the “invisible” revisions and comments the sender didn’t intend an outsider to see. The consequence may be the unintentional revealing of negotiation strategies, attorney-client privileged communications, and bottom-line negotiating positions on contentious issues.

The ability to work with documents electronically has more advantages than disadvantages, and the days are gone of parties exchanging paper copies of contract drafts by regular mail or fax. It is critical that parties to a contract negotiation recognize the risks and take reasonable steps to protect sensitive information that could be inadvertently disclosed by sending metadata in electronically-generated contracts.

Fortunately, tools are available, including easy-to-use functionality in Microsoft Word, to address metadata. As long as you remember to take the time to use them!